S corp acceptance letter

[kathyc2]

This isn't a client, just someone I had a casual conversation with.  He's a SMLLC organized in 2022.  I haven't seen returns, but from what he's telling me he filed Sch C for 2022, which was probably very small. 

For 2023 return he went to a preparer that plays fast and loose with rules from what I've seen.  Preparer told him he should be a S and filed 1120S for 2023.   

I know if 2553 is filed separately an acceptance letter will be generated.  If election relief was filed with return, will the acceptance letter still be generated?  He says he hasn't received anything from IRS if election was accepted or rejected.  

[WITAXLADY]

What do you mean fast and loose? Are you talking about me?!

Isn't that what you do? Take a Sch C, LLC and turn them into S corp's when they are profitable?

And even when 2553's are sent seperately - you have a 25% chance of getting the letter! 

I do not know on filing it together as we do both! Always mailing and attaching..

If the client does not get it - we resend it and request or have the client call the number to request one.

Best,

Darlene

[kathyc2]

57 minutes ago, WITAXLADY said:

What do you mean fast and loose? Are you talking about me?!

Isn't that what you do? Take a Sch C, LLC and turn them into S corp's when they are profitable?

I've seen all kinds of things come out of this person's office to convince me he plays fast and loose.  

In this case, the LLC had already filed one year as a Sch C for 2022, yet he filed the 2023 as a S without requesting approval first and no payroll.  I'm not aware or any late election relief if a return has already been filed for first year.   

S corp is not always the best answer.  In this case business performs services, no employees and minimal investment in equipment.  IMO vast majority should be wages and the added costs of an S return, payroll,  SUTA/FUTA, lower QBI and lower future SS benefits outweigh any potential "savings".